A. Judge Yankee Distilling Company produces a number of alcohol-based solvents for industrial contamination prevention use. One of the solvents, Ripit, is produced through an extensive distilling process. Yankee Distilling has developed the following standards for Ripit. Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.50 ounces 0.50 hours 0.50 hours Standard Price or Rate $28.00 per ounce $13.00 per hour $ 3.60 per hour Standard Cost $ 70.00 6.50 1.80 $78.30 For the month of August, Yankee Distilling recorded the following activity related to the production of Ripit: a. Materials purchased, 13,500 ounces at a cost of $361.800. b. There was no beginning inventory of materials, however, at the end of the month, 2.900 ounces of material remained in ending inventory c. The company employs 21 lab technicians to work on the production of Ripit. During August, they each worked an average of 140 hours at an average pay rate of $11.50 per hour d. Variable manufacturing overhead is assigned to Ripit on the basis of direct labor-hours. Variable manufacturing overhead costs during August totaled $4,400. e. During August, the company produced 4.200 units of Ripit. Required: 1. For direct materials: a. Compute the price and quantity variances b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? 2. For direct labor